PA Postpones Online Gambling Discussion until Fall

PennsylvaniaThe likelihood of regulated online gambling in Pennsylvania this year took a step backwards yesterday when further discussion was postponed until the fall.

Fears that the Pennsylvania legislature would pass crisis online gambling legislation to balance the state budget were alleviated last night, when Governor Tom Wolf signed off on a revenue plan that includes anticipated revenues from an expansion of gambling – without actually committing to any legislative action.

According to Senate Appropriations Committee Chairman Patrick Browne, the revenue plan counts on $100 million being generated from the expansion of gambling, but there will be no discussion about what constitutes an expansion of gambling until the fall. Senator Browne did not expand on whether the discussion would include online gambling.

Online Gambling a Small Brushstroke in a Bigger Picture

If the expansion of gambling is to include regulated online gambling, it is just one of a number of anticipated revenues streams that the legislature hopes will generate sufficient income to fill a $534 million hole in the budget. Compared to the proposed liquor reforms and regulation of Daily Fantasy Sports, regulated online gambling in Pennsylvania is not high on the list of priorities.

Furthermore, the regulation of online gambling does not have the same level of support in the Senate as it does in the House of Representatives – who passed a combined online gambling/Daily Fantasy Sports bill late last month. Senators are concerned that the tax rate of 16% is too low and that the bill offers insufficient consumer protection to online gamblers.

Insufficient Consumer Protection – or None at All?

Of all the states that have regulated online gambling to date, only Nevada offers a solid level of consumer protection in the event of an online provider going out of business. And, like the proposals to regulate online gambling in California and Michigan, there are no provisions in Pennsylvania´s current proposals to safeguard player funds in the event of fraud or bankruptcy.

In fact, in the hypocritical language of HB 2150 stipulates that tax revenues owed by gaming operators to the Commonwealth of Pennsylvania shall be held in trust, while leaving the mechanisms to secure players´ funds to be decided by the regulator at a later date. Effectively, if Caesars were to get an online gambling license, and go bankrupt the next day, players would have to join the back of the queue for their money – but the state would be assured of getting its tax revenues!

Why “Crisis” Online Gambling Legislation?

Realistically – and aside from the consumer protection issues – the only way in which the current proposals to regulate online gambling in Pennsylvania would have been adopted was if legislation was required to resolve the budget crisis. Evidence from a hearing of the House of Representatives in May – in which online gambling proposals [geolink href=””]were rejected twice[/geolink] before being finally accepted – would imply that few Representatives have studied the implications of regulation beyond the tax dollars.

As respected gambling journalist Mark Gruetze noted in the Pittsburg Tribune Review last year – when a budget crisis also existed in Pennsylvania – [geolink href=””]doing it right is better than doing it fast[/geolink]. Gruetze commented that the state has historically considered the implications to the public before introducing gambling legislation in the past. He said that by reacting to a crisis with crisis legislation the discussion would be limited at the expense of online gamblers.

Hopefully, when the legislature reconvenes in the fall, online gambling will get the consideration it deserves – provided the elections do not get in the way.

Jacqueline Packett
Jacqueline Packett